Research on the Stakeholders Protection under Taiwan’s Legal System of Business Merger & Acquisition: From the Perspective of Corporate Social Responsibility Theory
Date Issued
2010
Date
2010
Author(s)
Yang, Yueh-Ping
Abstract
Commencing from on the debates about corporate social responsibility theory, this thesis firstly explores whether a company, when making decision, “may” or “shall” take into account the stakeholders’ interests and even public interests into its decision in addition to maximizing shareholders’ interests. Based on the research result, this thesis further explores numerous stakeholders protection issues under Taiwan’s current legal system of business mergers and acquisitions, inclusing shareholders, creditors, labours and investors. This thesis also tries to supplement the deficiency in Taiwan’s current legal system with respect to the stakeholders protection in business mergers and acquisitions by the corporate social responsibility as constructed above.
In Chater II, this thesis explores the corporate social resposnsibility theory debates, examines individual argument of shareholder primacy theory and corporate social responsibility theory, and observes the development of related legal system under comparative laws such as United States, European Union, United Kingdom, Germany, Japan, and Mainland China, the implementation status of corporate social responsibility under international law level, and related academic papers put forward by domestic scholars. From the perspective of legal person nature theory and based on the real entity theory, this thesis argues that a company has its independent entity from its shareholders, and their interests are not attached to each other. In addition, from the central idea to promote the best aggregate interests of the society and to vest free space to companies, this thesis adopts the corporate social responsibility theory to unhook the company interests from shareholders’ interests, and suggests to add Article 1, Paragraph 2 of the Company Act to regulate the concepts of corporate social responsibility in statutes. Furthermore, this thesis characterizes Article 23, Paragraph 2 of the Company Act as a mandatory constituency clause anticipating to break through the restriction of traditional tort liability and impose companies and their responsible persons social responsibility, which specific stakeholders may base on to assert their rights when their basic interests are infringed.
In Chapter III, this thesis briefly introduce the basic concept under Taiwans’s legal system of business mergers and acquisitions, including the definition, categories, functions, procedures of business mergers and acquisitions, and relevant regulations as well, which may serve as the foundations to explore the legal systems of specific stakeholders protection (i.e. shareholders, creditors, labours, and investors) in business mergers and acquisitions in subsequent chapters.
In Chapter IV, this thesis researchs the shareholders protection in business mergers and acquisitions, and focuses on four basic shareholders rights: voting rights, appraisal rights, rights to claim directors duties, and right to bring direct actions. With respect to voting rights, this thesis on the one hand comments on the shareholders avoidance issues arising from Article 18, Paragraph 5 of the Business Merger and Acquisition Act and suggests to replace the ex ante avoidance system by the ex post facto review of fairness of transaction, while on the other hand introduces the materiality judgment principle as provided by domestic scholar to review the necessity to require the merger or acquisition to go thorugh special resolution process in each parties’ sahreholders’ meetings under current laws. With respect to appraisal rights, this thesis suggests to remove the requirements that dissenting shareholders shall waive their voting rights to acquire appraisal rights as provided in Article 12 of the current Business Merger and Acquisition Act, and introduces the materiality judgment principle as provided by domestic scholar to review the necessity to design appraisal rights in each mode of merger and acquisition under current laws. With respect to the right to claim directors duties, this thesis, based on the corporate social responsibility, suggests to amend the current Article 5, Paragraph 1 of the Business Merger and Acquisition Act to provide that shareholders shall pursue the company’s interests when handling mergers and acquisitions, instead of the interests of shareholders as a whole. With respect to direct actions, this paper examines the testing standard of shareholders direct actions, and explores whether shareholders may bring direct actions pursuant to Article 23, Paragraph 2 of the Company Act in different issues as involved in different modes of mergers and acquisitions.
In Chapter V, this thesis researchs the creditors protection in business mergers and acquisitions. This thesis suggests to take reference to the exceptional doctrine to the successor liability in business or asset acquisitions as developed in United States, and introduce the agreement exception, de facto merger exception, mere continuance exception, and fraud exception into Taiwan’s laws in the context of fictious expression of intent in collision and prejudice to creditors’ rights. This thesis also analyzes the creditors notification and announcement system and creditors’ rights maintenance system under current merger and secession laws, suggests to remove the regulation that parties may not assert merger or secession as a defense once failing to comply with these procedures, and suggests to analogize the above rules to acquisition. This thesis further researchs the legal system of directors duties to creditors as developed in comparative laws, analyzes the existing credtors derivative suit and direct suit system under Taiwan’s laws, and suggests to analogize Article 214, Paragraph 2 of the Company Act to introduce the creditors representative suit system, so that the creditors of the target company may on the one hand claim their rights by derivative or representative suits when directors breach their fiduciary duty, and on the other hand claim their righst by direct action pursuant to Article 23, Paragraph 2 of the Company Act when the target company fails to perform the above notification, announcement and creditors’ right maintenance system.
In Chapter VI, this thesis researches the labour protection in business mergers and acquisitions, and focuses on the employers’ right to agree on the continuance of employment and modify the labour conditions to the disadvantages against labours. After considering each right and interest of the employer and labour, this paper argues that the employers’ right to the continuance of employment and modify the labour conditions to the disadvantages against labours shall not be completely prohibited, while the existing general principle under current labour laws, such as the principle of last resorts to termination of employment and the principle of reasonable modification, shall be exercised, accompanied with the shift of burden of proof in litigation, to restrict the employers’ above rights. This thesis also affirms that labours, when faced with termination employment or modification of labour conditions to their disadvantages, may based on the corporate social responsibility to claim remedies pursuant to Article 23, Paragraph 2 of the Company Act in addition to related labour laws.
In Chapter VII, this thesis researchs the investors protection in business mergers and acquisitions, and focuses on the public companies’ duty to disclose information and misrepresentation liability. This thesis takes reference to the related developments under United States laws, then suggests that under statutory laws, only when a public company has enteres into a definitive merger and acquisition agreement, i.e. the transaction amount and the parties are identifiable, will it be under a duty to timely disclose relevant information. In addition, when there are merger and acquisition rumors in the market which is attributable to that public company, it is also under a duty to clarify such rumor. In the event that a public company fails to disclose it, which breaches such duty to disclose, this will become the misrepresentation in statements as provided in Article 20, Paragraph 2 of the Securities Exchange Act. In the event that a public company voluntarily discloses its merger and acquisition activity advancedly, but the disclosure is misrepresented, this will become the securities fraud as provided in Article 20, Paragraph 1 of the Securities Exchange Act.
Based on the above analysis, this thesis anticipates that on the theory level, the corporate social responsibility may be constructed, while on the regulation level, the stakeholders protection system under the current business mergers and acquisitions laws may be reviewed, so as to provide further contribution to Taiwan’s company laws.
Subjects
shareholder primacy
avoidance
appraisal right
fiduciary duty
direct action
successor liability
right to agree on continuance of employment
misrepresentation
SDGs
Type
thesis
File(s)![Thumbnail Image]()
Loading...
Name
ntu-99-R94a21036-1.pdf
Size
23.32 KB
Format
Adobe PDF
Checksum
(MD5):4c6a1af0d362ea0d26e8ad0b291d9b0f